Real estate buoyant last year despite high interest rates: Study

Published: Tuesday, January 1, 2008, 15:33 [IST]

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New Delhi, Jan 1 (UNI) The real estate sector in 2007 proved to be most aggressive in raising money from domestic sources, particularly through initial public offerings despite the RBI and government restricting the flow of external funds.

A study by industry body Assocham on 'Sectoral Analysis of IPOs' conducted for the period January to mid-December 2007 revealed Rs 14591 crore of the total Rs 34119 crore raised in the market, went to realty firms, with bulk of the amount going to DLF (Rs 9187 crore), Housing Development and Infrastructure Ltd (Rs 1707 crore) and Puravankara Projects Ltd (Rs 858.7 crore).

''Despite high interest rates, the real estate sector remained buoyant in 2007 primarily because of the strong underlying demand, aggressive marketing, entry of new players and upsurge in retail and multiplexes which is reflected by its share in IPO market,'' Assocham President Venugopal N Dhoot said.

Taking advantage of the boom condition in the capital markets, Power and telecom remained the next big grossers with respective IPO proceeds of Rs 4519.18 crore and Rs 2964.06 crore during the year.

Backed by its policy support and huge expansion activity, the power sector scored second among the highest primary market issues, as around five power companies were able to raise Rs 4519.18 crore during the twelve month period analysed by the chamber.

Telecom sector which is increasing its subscribers base by more than 50 per cent is vibrant in the capital markets as well. At third position with a share of 8.6 per cent, the two telecom majors Idea Cellular and Spice Communication realised Rs 2443.75 crore and Rs 520.31 crore respectively.

The services sector growing at a faster pace at 10.2 per cent than the industry (9.1 per cent growth in Q2, 2007), outpaced the latter in raising IPOs as well. The service based sectors accounted for 71.7 per cent share in the total IPOs being raised in 2007 amounting to Rs 24497.5 crore whereas Industrial sectors raised funds worth Rs 9622.2 crore with 28.3 per cent share.

In financial services and banking sector nine companies raised funds through IPOs contributing 8.3 per cent share in the total amount being raised Rs 2837.71 crore.

As many as eleven mid-size IT companies raised funds to the tune of Rs 1501.08 crore through initial public offers, contributing a share of 4.3 per cent to the total IPO space.

There were 101 Indian companies which raised the money from IPOs across 29 sectors amounting 5.8 billion dollars (Rs.34119.7 crore), said the study done by the chamber's Research Bureau for the calendar year 2007.